Estate planning is the process of considering, and creating a plan that allows you to control your property while you are alive, provide for yourself and loved ones if you become disabled, and distribute assets efficiently and effectively (i.e., you give what you have to whom you want, the way you want, and when you want).
Every person has different estate planning needs and goals. While some may be concerned about distribution of assets, others may be focused on providing for their minor children. Some families may require disability planning, special needs planning, or long term care.
The notion that estate planning is only for the very wealthy is false. Whether your estate is large or small, you can benefit from an estate plan. At the minimum, you should designate someone to manage your assets and make health care decisions for you if you ever become unable to do so for yourself. A basic plan with a will can also prevent the state of California from determining how your assets are distributed and who will be guardian of your minor children.
A plan involving a revocable living trust will allow your estate to avoid probate, which saves costs, prevents delays, and ensures that your affairs remain private. In California, probate is triggered when the gross value of the decedent’s real and personal property exceeds $150,000. So most people in California who own homes will meet this threshold, which means their estate will automatically go to probate when they pass away, unless they have a living trust. Such plan can also significantly reduce or eliminate income or estate taxes. A revocable living trust gives you control over your hard-earned assets, in case of incapacity and after you pass away. This entity allows you to avoid conservatorship during your lifetime. It protects your children’s inheritances if they are not mature enough to make decisions on their own. A living trust can also pass on your values to your heirs, and preserve your legacy.
Other advanced estate planning objectives may include protecting beneficiaries with special needs, for which a special needs or supplemental trust can be established.
One who wants to continue the tax-deferred growth of their retirement accounts for as long as possible even after their death, may opt for a stand-alone retirement trust. This is particularly significant following the U.S Supreme Court case of Clark v. Rameker (2014), which held that an IRA inherited outright by a non-spouse beneficiary is not protected from the beneficiary’s bankruptcy creditors.
If charitable giving is important you, we can establish a charitable trust that carries out your charitable intent, while also offering tax advantages for your estate. We can also provide for the care and maintenance of your pets.
At Tseng Law Firm, we will work with you to create a custom plan tailored to your specific goals and objectives.
Foundational Estate Planning Documents include:
• Will: written instrument that provides for the disposition of your assets after our death and nominates guardian(s) of minor children; only effective upon your death
• Durable Power of Attorney (financial): written document giving an individual the legal authority to act on your behalf regarding your finances according to the written terms of the document, when you are unfit to do so yourself. You can give such individual as much or as little control over your personal or business finances as you wish.
• Advance Health Care Directive: provides a statement regarding your health care (including end-of-life decisions related to life support measures); provides legal authority for a person to make medical decisions for you if you are unable to make them for yourself
• HIPAA (Health Insurance Portability and Accountability Act of 1996) Authorization: written document that authorizes your health care provider to release medical information about you to persons other than you or your representative
• Revocable Living Trust: legal entity that owns and holds assets for you, which can be changed at anytime by you. A trust becomes effective when it is created. It ensures that your estate will avoid probate, which keeps your affairs private; allows you to provide for the distribution of your assets when you are incapacitated or after you die; and may reduce or eliminate estate taxes.
• Pour-over Will: same as a Will, except, when used in combination with a revocable living trust, pours over your assets into the trust that may have inadvertently been left out of the trust, so that distributions can be made pursuant to the terms of the trust
If you have an existing estate plan, it is important to update it in conjunction with changing laws and circumstances in your life (such as birth of child, death of loved one, or purchase of new property). We can review your existing plan, and help you update it.
Protecting Your Children
For most of us, our children are our greatest asset. As such, we should do all we can to protect them. Parents do not want to think about leaving their children before they are adults, yet it is essential that this possibility be considered and an effective plan formulated. An estate plan sets forth your wishes for your children, which includes nomination of a guardian, and two alternatives, in the event of your untimely passing while the child is still a minor.
If there is no plan in place, the court will appoint a guardian to raise your child based on what it finds to be in the best interest of your children. This court appointed guardian may not be your first choice, or, in some cases, may not be on your list at all.
At estate plan can also safeguard your children’s inheritance, by giving you the ability to outline how much money your children will receive, the age at which they will receive the inheritance and to an extent how they are to spend this money. This allows you to designate funds for their college education or so they can buy a house. You can also choose to give your children their inheritance at a certain age, to help prevent them from wasting their inheritance. Such plan can also protect them from potential creditors, lawsuits or divorce.
You can name a trustee in your estate plan who can make sure that your children’s money is handled properly. You can also outline how the trustee is to budget funds for each child. This may be particularly relevant when you have children who vary in ages, or a child who has a special need.
An estate plan can also set aside funds to ensure that your children will be provided for even if your partner is not wise with money or remarries. For blended families, or families involving children from a prior marriage, an estate plan can designate that your assets will pass to your children, and not your stepchildren. Without an estate plan, your assets will pass to the spouse, who is under no legal obligation to pass the assets to your children.
Your assets are your hard-earned accomplishments, which you have accumulated during your lifetime. These may include real estate, bank accounts, savings, retirement plans, life insurance, stocks, bonds, business interest, and personal property.
We live in a highly litigious society, in which even frivolous lawsuits are expensive, timely, and stressful to deal with. Naturally, asset protection has become a common concern. Creditors, lawsuits, divorce and identity theft are common issues today. You may be a business owner who is susceptible to being sued for negligence or malpractice. Or your child may be in a bad marriage, in which case you want to protect your child’s inheritance in the event of divorce. Or you may want to protect your grandchildren to ensure that they receive their inheritances if your child passes away and your son-in-law or daughter-in-law remarries. Even if creditors and predators are only a potential concern, they can easily become a serious concern. Anyone can get into a car accident or become a victim of identity theft at any time.
At Tseng Law Firm, we can help you create a plan that addresses these concerns in an efficient and effective matter. We can evaluate your current holdings, and work with you to identify and implement the best ways to legally shield these holdings from potential creditors or predators. This will provide you with peace of mind that your loved ones are protected, your wealth is preserved, and your assets safeguarded.
In California, probate is the process by which the Court oversees the administration of the estate of a person who has died with assets that exceed $150,000 with no trust or beneficiary designations. Assets such as retirement accounts, life insurance benefits, and pension funds — which are transferred to the beneficiary by contract — are not subject to probate. Probate serves to ensure that the estate is valued impartially, that debts and bills owed by the estate are paid, and that the estate is distributed in accordance with the decedent’s wishes.
The probate process includes:
• Filing the Will (if one exists) and a Petition for Probate document with the county probate court.
• Demonstrating to the court that the Will is valid.
• Receiving from the probate court Letters Testamentary or Letters of Administration, which authorize the person to perform executor duties.
• Establishing an estate banking account.
• Taking inventory of the estate assets and obtaining appraisals for real estate, collectibles, jewelry and other valuables and filing the inventory with the probate court.
• Identifying debtors.
• Paying taxes and other bills.
• Resolving any disputes.
• Requesting the probate court to close the estate.
Once the probate judge approves closing the estate, the executor can then distribute the remaining assets. If there is a Will, the assets must be distributed according to the wishes expressed in the Will.
Probate administration is a complex and lengthy process and can take up to several months to over a year to resolve. This is why it is important to hire an experienced estate lawyer to oversee the probate process. Tseng Law Firm can assist with each step in the process, prepare all documentation properly, and handle any surprises that might arise. The goal is to avoid unnecessary delays, leading to a quicker resolution.
Trust administration is the process of distributing a person’s assets according to their wishes after they are gone. One of the advantages for creating a living trust is to avoid the expense and hassle of probate upon death. The administration of a trust is far easier and less expensive than probate. However, trustees are held to high legal standards and must follow certain procedures to safeguard effective administration while complying with California law.
The responsibilities of a trustee will come into effect immediately following the death of the trustor. These responsibilities can include:
• Notifying beneficiaries and heirs within 60 days of death
• Filing a Will with the Clerk of the Court
• Obtaining death certificates
• Changing title on real property and changing ownership on bank accounts
• Collecting, managing, investing, and distributing assets appropriately
• Filing claims for insurance, Veterans and Social Security benefits.
• Paying bills, expenses and taxes out of the trust estate
• Keeping beneficiaries or heirs informed of the administration process
The loss of a loved one is difficult enough, and the added pressure of administering the estate or trust can be overwhelming. At the Tseng Law Firm, you can hire us to guide and advise you through the process, so you can rest assured that all requirements, obligations, and deadlines are being met, and you can focus on grieving and your loved ones.
In addition to trust administration, we also assist clients with estate administration, i.e., administration of estates without trusts, including probate cases.